Google vs. Yahoo : Machine vs. Man

Google vs. Yahoo : Machine vs. Man

In our minds, the difference between Google and Yahoo! has always been the degree to which their core product relies on automation.

Google wins whenever the best solution is a highly automated, machine-solvable one. Yahoo! has the upper hand when the solution requires some level of human interaction and editing.

This is a distinction that goes back to the founding myths of the two companies. Yahoo! came to life as a curated index of internet resources managed by Jerry and Dave. Google, as envisioned by Sergei and Larry, was a mechanism to make all the internet’s information accessible and useful, and it had to be done by machines because the task was so enormous.

This is why Search was the natural model for Google and remains it’s core offering. Meanwhile, Yahoo has had to effectively give up on search, but still does a better job with segments that require some curation, news, finance and sports, in particular.

A few years ago, the default assumption would have been that a people heavy information gathering system (Yahoo!) would never survive the competitive onslaught of a heavily automated solution (Google).  Hand-crafted websites with good editorial values are still in many ways a notch above those built purely by algorithm (not to mention the constant battle with spammers who try to game search results). The evolution of the web has made us question that assumption. It seems to us that there is a role for curated/edited content and this can be quite valuable territory. We can easily see a large-scale curated search service having value. We also think the original Yahoo list could find a following amongst older users who may not adapt as easily to the free-flowing trial and error approach required to effectively use a search engine. Similarly, we can see the hierarchical list model having value for non-native English speakers, who may be more comfortable browsing through a tree than trying to recall unfamiliar words.  Yahoo’s initial list managed to create a sense of discovery. You could actually browse the web using it, much like you might library stacks or a department store. That element has almost entirely been lost on the modern Internet.

So, maybe Yahoo! does have a future, if it can go back to its roots and become the curated guide to all the Internet content that is worth your while.

 

As of this article’s publication date, Washington Square Capital Management and its clients do not hold positions in either company, this may be subject to change. We  may in the future acquire positions in other companies mentioned in this post. This article is not a recommendation to buy, sell or hold any securities mentioned.

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